The Canadian general government posted a $4.1-billion surplus in last year’s third quarter, compared with a deficit of $6.2 billion in the same period in 2024, mainly driven by higher revenue from social security funds. General government refers to all three levels of government and other government entities providing core public services in Canada combined.
Statistics Canada data released Friday showed that social security funds posted a surplus of $13.5 billion in the third quarter, compared to $5.4 billion from the same quarter in 2024, largely driven by higher interest and dividend income.
Excluding social security funds, the general government had a $9.4 billion deficit in the third quarter, down from $14.3 billion in the the third quarter of 2024.
The federal government recorded a $7-billion deficit, down from $7.9 billion in the third quarter of 2024. Provincial and territorial government deficit fell by $1.5 billion to $3.6 billion, partly because of compensation payments received from the tobacco companies through a court settlement. Local governments posted a surplus of $1.2 billion, down from $1.4 billion a year earlier.
The federal government’s deficit narrowed as revenue growth outpaced the rise in expenses. Federal government revenue increased by $3.5 billion, primarily driven by higher tax revenue ($2.8 billion).
Taxes on income, profits and capital gains rose by $3.6 billion (4.3%) in the third quarter, keeping pace with nominal GDP growth. Goods and services tax fell by $2.3 billion (-10.6%), primarily owing to the abolition of the federal consumer carbon tax. Taxes on international trade and transactions increased by $1.5 billion year over year, but at a slower pace than in the previous quarter ($2.1 billion) due to the removal of counter-tariffs on most U.S. imports.
Canadian general government net debt decreased by 10.2% year over year to $500 billion in the third quarter of 2025, mainly due to a $162.1-billion increase in the value of social security fund assets. Excluding social security funds, whose assets are earmarked to pay future benefits, net debt increased by 4.4% to $1.4 trillion.